Trump’s Trade War and the US Economy’s Prospects

5:21 am
&nbsp June 17, 2018

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WASHINGTON, DC – June 17, 2018

The World trade war has now entered its “hot phase.” As the Trump administration has now approved tariffs on $50 billion in Chinese goods. So our prediction has been borne out, there seems to be no reconciliation on the horizon.

Meanwhile, on Wednesday, the Federal Reserve announced an interest rate hike for the 2nd time this year.

The Federal Reserve increased a key interest rate again, Wednesday, which will trigger higher rates on credit cards, home equity lines and other kinds of borrowing.

Wednesday’s action, which was widely expected, was the second Fed rate hike this year — and the seventh since it began boosting them in 2015. The latest increase puts the federal funds rate in a range between 1.75 and 2 percent. The Fed previously nudged rates up in March.

According to Michael Snyder, a nationally syndicated writer, media personality, political activist, and author of four books including The Beginning Of The End and Living A Life That Really Matters, the quickest way to hurt the U.S. economy is to aggressively raise interest rates. Lower interest rates make it less expensive to borrow money, and therefore economic activity tends to expand in a low-interest rate environment.

“Because so much is based on what the Federal Reserve does, now interest rates will be going up throughout our economy,” Snyder said. “For example, we should expect the average rate on a 30-year fixed mortgage to surpass the 4.66 percent mark that we witnessed earlier this year…”

So why would the Federal Reserve do this?

According to Federal Reserve Chair Jerome Powell, the Fed decided to raise interest rates to keep the economy from overheating.

The decision reflected an economy that’s getting even stronger. Unemployment is 3.8%, the lowest since 2000, and inflation is creeping higher. The Fed is raising rates gradually to keep the economy from overheating.

“The main takeaway is that the economy is doing very well,” Fed Chairman Jerome Powell said at a news conference. “Most people who want to find jobs are finding them, and unemployment and inflation are low.”

If honest numbers were being used our unemployment rate would be at 21.5 percent, inflation would be at about 10 percent, and GDP growth would be negative.

So, it seems for the US economy there seems to be no good script anymore. If the Democrats take back control of either the House or the Senate in November, Trump’s agenda will come to a crashing halt and, thanks to the Federal Reserve, a bad scenario has just become much more likely.